Industrial Co-ordination Act

Everyone had expected an election budget, and true to expectations, the 1978 Budget that was presented last Friday was an election Budget. The trouble with an election budget, which gives out sweets, is that after elections, not only are the sweets taken away, but even more bitter pills are administered to pay for the pre-election sweets.

A closer study of the 1978 Budget shows that the sweets are given to the well-off and not to the poor, but which the poor will have to pay for after the elections. Import duties for jewelry , diamonds gold and precious stones are slashed by 10%, and on top of it, the sales tax on these items are further slashed from 10% to 5%. These election sweets are not for the poor, but for the rich.

Other luxuries like golf bags ( the game of Ministers and the rich ) , cameras, leather products, including “articles of apparel and clothing accessories, of leather or of composition leather” ( but not ordinary clothing ) have had also their import duties slashed. Again the poor are not going to benefit from these reductions.

It is a mockery of the professed New Economic Policy to combat poverty when the Government has time and money to reduce import duties for luxury goods but no time nor money to reduce the import duties and excises on essential goods which the Malaysian poor must spend on.

The Minister of Finance claimed in his Budget speech that “almost all essential goods carry nil duty rates”. The trouble with the Finance Minister is that the definition of “essential goods” for the poor are very strictly and narrowly defined, while “essential goods” for the well-to-do knows no limits!

In view of the serious inflation in the country, where prices keep climbing up, the Finance Minister should have concerned himself with reducing the prices of essential goods, and services, by downward adjustment or abolition of import duties and excise, as for instance, for foodstuffs, textiles, and clothing, transport costs and fuel and power.

The Malaysian poor, who have a little over 10% of total income of the country, pay high or than 10% of the taxes for categories of food, beverage and tobacco, and rent, fuel and power, which constitute relatively large parts of the household budgets of the poor.

For this reason, any financial measure which can quickly add even one percent to the income of the poor should be a matter of immediate priority.
The reduction of a few hundreds dollars in precious stones or diamonds for the rich means more money for the rich to live even more ostentatiously, but a reduction in five or ten cents for bus fares, or a dollar or two for clothing, will make a world of a difference for the poor!

Beginning Oct. 1, bus and taxi fares went up by five and ten cents respectively for the first mile (although in many cases the bus fares have gone up by 10 cents).

For a worker who has to take two buses to work, this will mean an additional monthly expenditure of about $5.50 a month for bus fares alone. If he has say two children, who go to school by bus, the additional transport expenses he will have to bear will exceed $10. This will be 10% of his real income if his salary is $100 a month or 5% of his real income if he earns $200 a month. This is only transport, without taking into account the spiralling costs of foodstuffs and other services. The net result is a detericrating standard of living for the poor and low-income groups.

The Government has in this case allowed itself to be blackmailed by the bus operators, especially Sri Jaya in Kuala Lumpur, to approve the bus fare increases without a thorough study of the adverse consequences it will have the on the low income groups. This is especially apparent as the Ministry of Works and Utilities had earlier claimed that it could not make any recommendations to the Cabinet about the proposed bus fare increases unless all the bus companies had submitted their accounts to the Ministry. When the Government announced approval for the increase in bus fares, half of the bus companies had not yet submitted their accounts.

In defending the bus fare increases, the Acting Prime Minister, Dr. Mahathir Mohamed, claimed that the bus fare increases was given with conditions for improved bus services- while the commuters and the poor who have to make use of bus services as their only means of transport are burdened with a crushing transport bill which slashes their real income by 5 to 10 per cent. This is most unjustifiable, and I call on the Finance Minister to seriously reconsider the adverse effects of the bus fare increases on the standard of living of the poor.

Instead of reducing import duties on luxuries, the Finance Minister could have helped the poor, if not in reducing their transport costs, but at least in maintaining and stabilising their transport expenses.

The Government could achieve this without burdening the poor by reducing import duties on petrol and heavy and fuel oils for bus companies or by reducing road tax for buses and taxies.

Repeal of Industrial Co-ordination Act a pre-condition for the encouragement of foreign investment and release of domestic capital for domestic investment

The Third Malaysia Plan target for private investment is 10%. The Finance Minister’s forecast for private investment in 1977 is 9%, the Finance Minister claimed last Friday that the rate of private investment achieved for this year will be 8.2%, which is generally doubted.

What is hot doubted, however, is that the pick-up of investment in Malaysia has been dismally slow. The basic reason is one of confidence, for not only are Malaysians edgy and scary of investing their capital locally, but Barisan Nasional leaders are known to have siphoned funds abroad. In these conditions, it is naive to expect foreign investors to come in droves to put their money in Malaysia, when Malaysians and Barisan Nasional leaders are steering clear of their own country.

The DAP calls on the Barisan Nasional to regain confidence of Malaysians to invest in Malaysia. Before this can be done, there are several vital steps which the Government must take.

Firstly, it must be repeal the Industrial Co-ordination Act, which typically represents what is wrong with the New Economic Policy implementation in eroding and removing legal protection for local investors, especially non-Malay investors, and the introduction and substitution of the concept of bureaucratic discretion in approving plans, licenses and applications. Vague terms of ‘national interest’ can, form past experience, cover a multitude of sins!

The repeal of the Industrial Co-ordination Act is therefore a Prerequisite to regain confidence of Malaysians in the security of their investments in their own country!

The introduction of the concept of bureaucratic discretion in approving plans, licenses and applications provide opportunities for corruption, abuse and misuse of power.

Secondly, the restoration of the confidence of all Malaysians in the future, of Malaysia for their children. That this has been a great question mark can be gauged by the mass migration of doctors and professional people abroad, including the doctor-brother of the Deputy Minister of Education, Mr. Chian Siang Sum.

The Government has so far turned a blind eye to these concerns of large sections of Malaysians, and so long as these concerns are ignored and their basic factors disregarded, then there can never be a full domestic confidence about the future of Malaysia. In fact, this can be highlighted by the fact that Minister prefer to have their children educated abroad whether for primary or secondary education, rather than locally!

It has been said that Malaysia lives between a Dream and a Nightmare. Its dream is the enormous potential wealth of its natural resources and its small population of only 10 million. Its nightmare is the spectre of political violence between races an economic interests over the distribution of these benefits.

We are presently heading towards the nightmare. Let us retrace our steps and realise our dream.

We can do this by recognising, firstly, that the NEP, through its pre-occupation with the creation of a Malay capitalist class, can only accentuate class tensions among the Malays, and even worse, the eventual resort to the politics of race to explain why the Malay poor masses remain poor after the NEP had created a Malay capitalist class. Secondly, the emphasis on race distinctions in every facet of Malaysian life from school onwards is highly detrimental to the task of nation building aimed at the inculcation of a Malaysian consciousness and identity transcending racial ones.

Both these factors if not checked will become major divisive forces destroying the economic and political future of the country. We should retrace our steps from such a nightmarish future by

1. Focussing on the upliftment of the poor regardless of race, most of whom, will be Malays.

2. A genuinely, and not selective, restructuring of Malaysia society; and

3. Full acceptance in principle and practice of the multi-racial basis of our nation, where every Malaysian can develop his or her potential and capacity to the fullest and contribute to the development of the country.

(Speech by Parliamentary Opposition Leader. Member of Parliament for Kota Melaka and DAP Secretary-General, Lim Kit Siang, in the Dewan Rakyat on Nov. 1, 1977, on the 1978 Budget)